Managerial Accounting: Definition

Managerial accounting is the process of “identification, measurement, analysis, and

interpretation of accounting information” that helps business leaders make sound
financial decisions and efficiently manage their daily operations, according to the
Corporate Finance Institute. Unlike other branches of accounting, this role is focused
on internal data gathering and reporting, meaning professionals do not typically work
with or advise external clients. Instead, managerial accountants focus on
understanding their company’s cash flows, financial transactions, operating costs and
internal rate of return. Once collected and analyzed, this accounting information is
translated into reports and presentations that inform budgeting decisions and future
investments.

Since managerial accountants generally aren’t responsible for external reporting

(though they may be called upon to do it at times), they can make use of analysis and
reporting techniques that fall outside traditional accounting standards, such as the
generally accepted accounting principles (GAAP). This allows them to tailor their
findings in ways that meet different end-user needs without worrying about regulatory
compliance.

For example, a managerial accountant may be asked to chart expenditures in a graph

format by one department, and to translate this financial information into percentages
by another. Not only does this flexibility enable more granular and actionable
financial reporting, it can also help optimize product costing, budgeting and
forecasting activities.

Managerial Accountant Job Description

Managerial accountants can work for public or private companies, as well as for
government organizations and not-for-profits. While the specific job description of a
managerial accountant will vary from one organization to the next, their duties and
responsibilities often encompass:

 Preparing financial and transactional data for use within an organization

 Evaluating and managing financial risks
 Analyzing the cost of products or services, and breaking down this
information for different cost and/or revenue centers
 Modeling and forecasting cash flows
 Recording and analyzing cost and revenue data to help the company budget
properly and perform optimally
 Collaborating with members of the management team to assess the company’s
investment opportunities
 Supervising lower-level accountants, including those who perform more basic
accounting or tax preparation tasks